As noted in our previous article, FCA Changes for Appointed Representatives, the Financial Conduct Authority (“FCA”) has confirmed new rules to improve oversight of Appointed Representatives (“AR”), which will take effect on 8 December 2022 (“New Rules”). The AR regime is set in primary legislation and allows unauthorised firms to engage in regulated activities without having to be authorised by the FCA.  The New Rules will act to:

(a) enhance oversight of ARs;

(b) impose greater obligations on ARs to minimise risk and misconduct; and

(c) disclose additional notifications and information to the FCA.

The firms affected by these new rules will be required to take the necessary steps to ensure they are compliant, which will include collating information from existing ARs, assessing any potential gaps, engaging ARs with the compliance requirements, integrating the regulatory oversight in the governance framework and senior management accountability, updating all necessary internal policies, and amending the AR agreements.

Many of the changes place the burden on the principal firm to ensure they are obtaining access to sufficient information from the AR. As a result, we recommend that principal firms update their AR agreement template, update their terms with current ARs, and enhance their AR onboarding processes to cover a number of the FCA’s requirements up front with new ARs.

At Cleveland & Co, we can provide legal advice on how the changes will affect your business. We will also provide guidance on how to prepare the relevant documents in readiness for submission to the FCA, in addition to updating your agreements with ARs. To find out how Cleveland & Co can support your business in implementing the New Rules, please click below.

If you are a principal firm or Appointed Representative, Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.

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